Sign InPayPal stock holds long-term growth potential, but short-term downtrend expected
Summary
PayPal's stock, which closed at $66.79 on July 07, 2023, is showing signs of promise with its involvement in blockchain and cryptocurrency, undervaluation compared to growth potential, and positive fundamentals, but short-term technical indicators suggest a possible downtrend. Based on the analysis, it should be classified as a Hold or Buy for long-term investors, considering risk tolerance and investment horizon.
Fundamental Analysis
PayPal Holdings, Inc. (PYPL) closed at $66.79 on July 07, 2023, with a slight increase of 0.98%, marking a change of $0.65. With a market capitalization of $77.29 billion, the company has 1.12 billion outstanding shares. Its volume was 14.53 million, compared to an average volume of 17.56 million. The EPS is $2.38 with a PE ratio of 29.11.
The range between the year high of $103.03 and the year low of $58.95 reflects significant volatility in the stock, and at its last closing price, the stock is trading closer to its year's low.
PayPal's discounted cash flow (DCF) is $75.99, which is a bit higher than the current stock price at $66.79, indicating that the stock may be undervalued. The price targets suggest a significant bullish outlook with a median target of $123, consensus target of $130.46, and high target of a whopping $290.
The earnings announcement is expected on August 2, 2023, which may reveal more insights into the company's recent financial performance.
Technical Analysis
The RSI14 at 54 is neutral, indicating the stock is neither overbought nor oversold at this time. The 50-day moving average is $66.02, and the share price is currently just above this level. However, it is below the 200-day moving average of $75.54, which might signal a longer-term downtrend. The MACD of 1.87 also suggests a possible downtrend.
News Analysis
Recent news suggests PayPal's increasing involvement in the blockchain and cryptocurrency space, which could be beneficial for its long-term growth. The advantage of blockchain technology has been recognized by major financial institutions and high-level professional investors. PayPal's potential as a highly attractive investment has been highlighted, given the company's participation in the crypto market, and its current undervaluation compared to its growth potential.
Outlook and Recommendation
Given the recent price compared to PayPal's DCF value, as well as positive sentiment around the company's involvement in the rapidly growing blockchain technology and crypto markets, the fundamentals for the company are promising. The technical indicators are mixed but suggest a possible short-term downtrend.
For its stock price on the next trading day on July 10, 2023, considering the possible short-term downtrend, it may experience slight decreases but should still hover around its current price level. For the next week, it should be closely monitored to see how it reacts to market situations.
PayPal's stock appears to hold promise for long-term growth potential, especially considering its blockchain and crypto initiatives. Simultaneously, its current price seems attractive compared to its DCF value and bullish price targets. Given the slightly underperforming short-term technical signals, the stock is harder to predict in the short term.
Based on the analysis, PayPal's stock should be classified as a Hold, if not a Buy for investors with a long-term outlook, depending on their risk tolerance and investment horizon. The company's valuation is attractive for long-term gains, despite the possible short-term downtrend. It's essential to consider the earnings announcement in August, which may further impact the stock's direction.
